Physical Settlement
Physical settlement is a settlement method for derivative contracts where the obligation is satisfied by delivering the underlying asset to the holder, rather than paying a cash amount. It contrasts with cash settlement, where the difference in value is settled in cash.
Example: In a physically settled futures contract for 1,000 barrels of crude oil, delivery of the specified crude to the designated delivery point occurs on the delivery date in exchange for payment based on the contract's settlement price.
💬 Comments